ED carries out Search and Seizure against Foreign Registered Online Gaming Companies, unveils Rs. 4000 Cr Layered Remittance Tax Fraud

The Directorate of Enforcement (ED) conducted search and seizure operations on 22.05.2023 and 23.05.2023 at 25 locations in Delhi, Gujarat, Maharashtra, Madhya Pradesh, and Andhra Pradesh. These operations were carried out under the provisions of the Foreign Exchange Management Act (FEMA), 1999, as part of an investigation into online gaming companies/websites registered in foreign countries like Curacao, Malta, and Cyprus, but operating in India.

These companies/websites have Indian Bank Accounts opened in the names of proxy individuals with no involvement in online gaming. They collect funds from the general public through gaming websites and then channel the money through multiple bank accounts, ultimately transferring it out of India by falsely declaring the purpose of the remittances as import of goods/services. Such remittances from income earned through activities like racing or hobbies are not allowed under Foreign Exchange Management Act (FEMA), 1999.

The search operations targeted premises associated with several Hawala operators, including Ashish Kakkar, Neeraj Bedi, Arjun Ashwinbhai Adhikari, Abhijeet Khot, and their associated persons/entities. These searches led to the seizure of incriminating documents and electronic evidence, shedding light on their evasive tactics employed to avoid detection by investigative agencies.

The key individuals involved in this scheme have established hundreds of companies in the names of their employees, enabling them to layer and transfer approximately Rs. 4,000 Crore in remittances disguised as payments for import of goods and services. During the searches, numerous PAN cards, Aadhar cards, mobile phones linked to bank accounts of these firms, and office stamps were discovered and confiscated. The individuals also utilized international virtual mobile numbers and pseudonyms like Pablo, John, Watson, etc., to conceal their true identities while communicating through messaging apps such as WhatsApp, Telegram, and Signal. Additionally, they employed remote-based servers and laptops accessed via applications like Anydesk and TeamViewer to evade investigation. Two such remotely accessed laptops were recovered and seized from a server service provider located far away from the actual operational sites.

The seizures made during the searches included incriminating documents, electronic devices, demonstrating outward remittances worth thousands of crores collected from the public through gaming websites. They also found Rs. 19.55 lakhs in cash, US$2695, and froze 55 bank accounts belonging to firms used for layering and remitting income generated from online gaming, under the guise of import of goods and services.

The investigation is currently ongoing.

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